Holiday Spending Expected to be Strong
New York, NY, December 15, 2021-"Consumer spending has been a primary driver of strong economic growth this year. Retail sales rose nearly 15% in October, from a year earlier, showing low unemployment, rising wages and savings from stimulus payments are giving Americans the capacity to spend more, even when accounting for historically strong inflation,” reports the Wall Street Journal.
“Consumer prices rose 6.8% in November from a year earlier, a 39-year high, according to the Labor Department. Although major bottlenecks persist at ports around the world, retail imports are expected to finish the year with both the largest volume and fastest growth on record, according to the National Retail Federation.
“‘Clearly consumer demand is really strong and, at least up to now, can tolerate some of the price movements we’ve seen,’ said Alexander Lin, an economist at Bank of America.
“Since retail sales figures aren’t adjusted for inflation, higher prices contribute to some of the growth. But other factors, like a persistent savings glut for many consumers since the worst of the pandemic, are also fueling growth. That can contribute to a continued cycle of rising prices, given that companies feel confident that customers will be willing to pay them.
“‘We’re not seeing that resistance,’ said Bruce Thorn, chief executive of Big Lots Inc., the discount retailer, on an earnings call earlier this month. ‘We’re expecting to be able to continue to pass along these price increases.’”